Earlier quoted context omitted.
> Okay, just make life harder for everybody. Nice. If you spend less on one thing, you can spend more on other things (or tax less), so I don't see how that follows. > How does subsidizing education, thus creating more college graduates, increase the value of a degree? I would think about it like this instead: subsidizing education lowers the cost, making it more attractive than it otherwise would be compared to the…
What I mean by the value, is what employers are willing to pay. Even Kaplan admits that college graduates get paid more. The subsidy should drive more people into college, but depress the wages of college graduates. In fact, Kaplan admits that college increases pay more than it increases productivity -- that it benefits graduates more than it benefits countries as a whole, suggesting that something about college educ…
The fact that college graduates get paid more seems adequately explained by the signalling model he presents. How else do you explain the big pay differences for college graduates vs people who dropped out early? They are bigger than you'd expect from just skill/knowledge gain.
> it benefits graduates more than it benefits countries as a whole, suggesting that something about college education enables people to keep more of their own production.
Kaplan would agree would you there, he thinks it makes sense for individuals now to go to college, but as a society it doesn't make sense to subsidize, because it is mostly just signalling, and there are cheaper ways to achieve that.
An analogy he uses is that say you are at a movie theater, and you could see better if you stood. It could be true, but it doesn't follow that everyone could see better if everyone stood.